Concerns about cybersecurity threat to the insurance industry

Warren Buffett, the CEO and Chairman of multinational conglomerate Berkshire Hathaway, said that incidents regarding cybersecurity would tend to rise. Because of such events, he believes that it will cause significant harm to the insurance industry.

During the Berkshire Hathaway 2018 Annual Shareholders Meeting, he said that cyber is uncharted territory and that it is going to be worse. There is a material risk that did not exist 10 or 15 years ago and that it will be much intense as the years pass.

The company has an idea on how to accurately assess the probability of earthquakes in California and hurricanes in Florida and that the concept does not involve computer hacking threats.

Buffett showed skepticism regarding the fact that any insurance company can assess the risk for cybersecurity events. He said that he does not want much “underwriting exposure” to cybersecurity breaches for Berkshire’s insurance business.

Cybersecurity is a more significant threat to humankind than nuclear weapons. In 2015, Berkshire engaged in a bet that could profit from cyber breaches. They released two insurance policies that cover cyber liability and the costs incurred to respond to a data breach or threat.

Some analysts said that there are four steps to better protect the government and the industries it regulates from cyber threats. They noted that cybersecurity should be a part of the Securities and Exchange Commission’s Chief agenda.

Another step is to appoint senior cybersecurity leaders for every federal regulatory agency. More companies in the private sector see that cybersecurity has to be an organization’s priority. Unfortunately, in the public sector, the issue is being treated as “an IT issue buried deep inside the bureaucracy.”

It was also suggested to not “overlook the basics.” It meant that CISOs should cover the basics first instead of purchasing the newest security technology. Also, the three most fundamental security practices are patching, multi-factor authentication, and micro-segmentation.

At a conference last year, Buffett made cautionary comments about humanity’s future saying that “we have to thank the government for the fact that catastrophic destruction has been avoided since the first atomic bombs were dropped in World War II. He also said that artificial intelligence might have to contend with artificial intelligence.